Check for any dormant individual entrepreneurs: in 2025, you will need to pay for them – an expert has revealed the amount.
Starting in 2025, individual entrepreneurs (IE) in Ukraine on a single tax will lose the military exemption for paying the unified social contribution (USC). This means that those IEs who were in the 3rd group and paid nothing in the absence of income will now have to pay at least 1,760 hryvnias in USC per month, unless they qualify for another exemption. Therefore, "zero" IEs must decide what to do next. Tax consultant Mikhail Smokovich discussed the available options and risks on his YouTube channel.
From 2025, USC payments will again be mandatory. If you do not have any exemptions other than military ones, you will need to pay at least 1,760 hryvnias in USC per month.
"Only pensioners, persons with disabilities, and IEs who have a main job for which the employer pays USC at least at the minimum rate can voluntarily pay USC in 2025. If you do not fall into this category, you have two options. The first option is to pay USC quarterly from 2025, filing declarations, meaning you need to ensure that all payments and reporting for your IE are in order, even if there is no income – take care of not having to pay anything and reporting," – explained Smokovich.
Risks When Closing an IE
After closing an IE, a liquidation audit may be conducted for the IE. You will need to submit documents regarding your activities to the Tax Service.
"Liquidation audits are still not very common, definitely not for all IEs, so this risk exists. In the general taxation system, if you have no income, you pay nothing, and just submit a declaration once a year," – emphasized Smokovich.
Transitioning to the general taxation system also carries certain risks. If there was no income in 2024, or if it was less than one million hryvnias, then there are no risks. You simply transition to the general system, pay nothing, and file a declaration once a year.
"If there was income in 2024 even under the single tax, some tax officials believe that in this case, upon transitioning to the general system, you also need to register as a VAT payer. In my opinion, this is a somewhat strange position from the Tax Service, because the obligation to become a VAT payer arises exclusively in the general taxation system if the turnover exceeds one million hryvnias per year, so we can ignore such letters," – advises Smokovich.
If you decide to close your IE to avoid paying anything in 2025, you need to close it in 2024. If for some reason you still need the IE in 2025, you can re-register for the single tax and continue operating if you closed it in 2024.
"If you submit an application by December 20, 2024, to transition from the single tax to the general taxation system, your IE will be switched to the general system starting January 1, 2025. Additionally, if necessary, you can return to the simplified system starting from the first day of any quarter in 2025. For this, you need to write a statement no later than 15 days before the start of the quarter from which you want to return to the simplified taxation system and operate under the single tax," – summarized Smokovich.
How Much Tax Will IEs Pay in 2025
Previously, we reported that the law on record tax increases in Ukraine came into effect on December 1. The changes imply tax increases for individuals and entrepreneurs. Specifically, the military tax has increased from 1.5% to 5%. This applies to everyone except military personnel. Smokovich discussed on his YouTube channel what we will need to pay in 2025 and who will have exemptions.
The first group of the single tax will pay 302.80 hryvnias per month by the 20th of each month. Additionally, there will be a military tax of 800 hryvnias, calculated as 10% of the minimum wage. Moreover, there is a unified social contribution calculated at 1,760 hryvnias per month.
"Although USC is paid quarterly, it amounts to 5,280 hryvnias for the quarter; however, if you prefer to pay monthly, you can do so. If calculated monthly, the total tax burden comes to 2,862.80 hryvnias," – stated Smokovich.
The second group pays 1,600 hryvnias of the single tax each month by the 20th, 800 hryvnias for the military tax each month by the 20th, and 1,760 hryvnias for USC. In total, this amounts to 4,160 hryvnias per month.
"The third group pays 5% of the single tax on income, the military tax is 1%, and USC is 1,760 hryvnias calculated per month," – noted Smokovich.
According to him, the 5% single tax and the 1% military tax are payable at the end of the quarter, no later than 10 days after the deadline for submitting the declaration. This means that at the end of the quarter, there are 40 days to pay the single tax and military tax.
Exemption for the Unified Social Contribution
The budget for 2025 has abolished the military exemption for USC. However, there remains an exemption for certain entrepreneurs who can continue not to pay USC:
- IEs who are also pensioners,
- Persons with disabilities,
- IEs who are hired workers for whom USC is paid by the employer at least at the minimum rate,
- IEs under the general taxation system with no income.